J.R.R. Tolkien’s fabled Dwarf Kings Thrór and Thráin did not return from the dead to reclaim their Lonely Mountain homeland, and gold didn’t exactly “flow in rivers through the mountain gates” of Erebor, but, as far as Air New Zealand (ANZ) was concerned, there was much to celebrate yesterday for the once and future “Official Airline of Middle Earth”.
At a press briefing held on Wednesday morning, ANZ announced earnings before taxation of NZ$256 million for the 2013 financial year, an increase of 172% on the previous year and the carrier’s best result in five years. Net profit after taxation was NZ$182 million, representing a NZ$111 million – or 156% – increase over the prior fiscal year. Operating cash flow was also at its highest ever at NZ$750 million, and the company reported cash holdings of NZ$1.15 billion.
“This result is one that investors, Air New Zealanders, customers and our nation can be proud of,” said longtime ANZ chairman John Palmer, adding: “It marks the start of an exciting new phase as chief executive officer Christopher Luxon and his management team drive their ‘Go Beyond’ strategy to grow the airline.” Palmer also said that these results place ANZ firmly amongst the best performing airlines globally.
“Strong results allow Air New Zealand to reinvest in its products, services, training and development to further enhance the customer experience and to connect more people and businesses than ever to, from, and within New Zealand.”
As part of that new investment, ANZ has committed to spending NZ$1.8 billion on aircraft over the next three years, during which time the carrier will introduce to its fleet: two Boeing 777-300ERs, six Boeing 787-9s, nine Airbus A320s, and four ATR72-600s.
While the expansion and upgrading of ANZ’s fleet is a sure sign of the carrier’s confidence in its growth potential moving forward, company CEO Christopher Luxon said taking the carrier’s already stellar passenger experience to the next level is key to sustaining 2013′s commercial success in the future.
“We have 11,000 people working together with the goal of growing Air New Zealand and further enhancing our award-winning customer experience,” said Luxon. “We are more customer-centric than we’ve ever been and the growth in membership of our Airpoints programme during the last year shows that our products and services are resonating with customers. Airpoints membership is now 1.4 million, up 17% on the previous year.”
Is inflight Wi-Fi on long-haul flights in the offing? “Clearly, with the 787 coming there’s a lot of things under exploration,” said an Air New Zealand executive on the call, “but one of the challenges for us is the trans-Pacific zone isn’t that well covered as opposed to other areas, in terms of satellites, relatively speaking”.
The APEX Editor’s Blog caught up with Luxon by telephone during the briefing yesterday and asked him if he felt that ANZ’s embrace of hip, social-media-fuelled marketing concepts (like its string of memorable – and viral – inflight safety videos) had anything to do with the carrier’s huge uptick in profits, not to mention their growing “coolness factor” worldwide?
“Well, I’d argue that we’ve been cool for some time, but, it’s great to know that we’re getting recognition and attention in the States, because, of course, that is a very important market for us … I’ve lived in America for eight years and there are 22 million Americans who come up to us and tell us they want to come and do a trip to New Zealand before they die,” said Luxon.
“And last year, 174,000, I think it was, came. So, the challenge is … to get you guys thinking about coming here on your next holiday rather than before you pass away, because it would be terribly tragic not to experience New Zealand as a result,” joked Luxon.
And as far as those cheeky inflight safety videos are concerned, Luxon admitted that even he has been stunned by just how widespread their viewership has become online. “Our safety videos work on two levels, one is they genuinely get a disproportionate amount of attention in the cabins. You know, a number of airlines you sit there and I think you just switch off. That’s not the case [here]. We get very high attention … and they work for us in a safety sense. And also, importantly, if you think about The Hobbit, I think we generated 10-12 million YouTube views, which is just amplifying the branding through a creative marketing vehicle.”
And while hobbits are just one of the many reasons for ANZ remarkably rosey financial picture these days, Luxon admits the carrier’s association with the film franchise has definitely boosted its bottom line. “The Hobbit has been very, very important.” said Luxon. “We think it’s probably because fans of The Hobbit are also fans of New Zealand and I think it’s driven quite a lot of business for New Zealand tourism in general.”
But at the end of the day, Luxon said the real secret to ANZ’s successful turnaround over the past decade had everything to do with the decidedly human touch of outgoing chairman John Palmer.
“Air New Zealand would not be the airline it is today without John Palmer’s leadership of the Board for more than a decade,” said Luxon. “He took on the hardest governance job in the country following the recapitalisation of Air New Zealand and has recruited and supported three chief executive officers and their management teams to rebuild the airline to again make it a profitable, customer-centric, globally award-winning airline that New Zealand can be proud of.”
Palmer will retire as ANZ chairman at the annual shareholders’ meeting in Auckland on 27 September of this year. He will be replaced by deputy chairman Tony Carter.